Power Metal Resources rides the U-boom, and lays careful plans for a profitable 2024 – Proactive Investors UK

Uranium.

Uranium and gold.

The two stellar performers of recent months on the commodity markets and, not by accident, the two commodities that Power Metal Resources is most exposed to.

The gold assets are spread across various jurisdictions, including the USA, southern Africa, and Australia, and are held either directly, or through various of the vehicles in which Power Metal holds an interest.

Up until now, though, the uranium has been held directly.

But, as 2023 rolls into 2024, and the uranium price consolidates at its current levels of above US$80 per pound, that’s likely to change.

After all, the attractiveness of the Power Metal uranium position in such a strong pricing environment can hardly be understated. The company controls a huge swathe of land – more than a thousand square kilometres – in and around the Athabasca Basin in Canada, arguably the most prolific and reliable source for uranium in the Western world.

True, much of the price-setting is done out of Kazakhstan, but for what the Western world can control, the Athabasca is it, alongside a few add-ons in sub-Saharan Africa and the USA.

For a junior miner to have accumulated such a commanding land position in such a key location ahead of time is impressive and now, when markets for most commodities are lacklustre to say the least, is the time to capitalise.

UEE, the new Power Metal uranium vehicle, has just completed a pre-IPO fundraising round, ahead of a planned listing in the New Year.

The fundraise and the listing plans come in the wake of what Power Metal chief executive Sean Wade calls “an extremely successful exploration season,” in which the company investigated in nine of its 17 properties, and identified “promising targets for future exploration.”

There was a major fundraising in May, in which well-known Canadian investor Rick Rule came onto the register in a big way, but since then, shareholders haven’t had to put up with any of the crippling dilution that has been driving away interest from other junior miners. Power Metal did raise more than £500,000 last month, but that was through the sale of shares in Kavango Resources.

“We don’t take it at all lightly when we raise capital,” says Wade. “I’m very conscious of dilution and returns, which is why we’re looking at all possible funding resources.”

It’s also why the Power Metal model of spinning its most promising assets into standalone vehicles makes a lot of sense.

Earlier in the year, in May, Golden Metal Resources, which holds tungsten and gold assets in Nevada, was successfully spun out of Power Metal. Originally, Power Metal paid £1.9mln for the Golden Metal assets, and the stake that remains in the company’s hands is now worth nearly £5mln.

If it can be done, the attractions are plain enough – the idea is that Golden Metal Resources will be the first of several, and it now looks like UEE will be next.

But others are waiting in the wings too, including First Development Resources, which has gold in Australia, as well as some uranium, and New Ballarat Gold, a joint venture with Red Rock Resources which is also active in Australia.

So with all this gold and uranium, and with gold at US$2030-plus and uranium at over US$80, Power Metal must be riding high too, right?

Up to a point, at least.

“We’re in a good cash position,” says Wade. “And we have our IPO programme. And we have support from Rick Rule, who has made very valuable introductions for us.”

But overall, the market for junior miners has been just terrible over the past year or two, as risk capital has fled in the face of higher interest rates, the attractions of bitcoin, and a general failure of small cap mining to deliver enough notable successes to keep people interested.

Wade concedes that high commodities prices haven’t in general translated into higher share prices. At least, not yet.

Will the recovery come in 2024?

Or, to put it another way, are we now at that point of capitulation where the only way is up?

If we are, Power Metal Resources looks to be a company almost perfectly positioned to take advantage. It has established assets, the majority of which are in very safe, if not to say A-grade jurisdictions, it has a decent track record, a proven business model, and a clear path forward.

“I’m very confident that when markets normalise we’ll be in a strong position,” says Wade.

And the newsflow between now and then may just tee it all up perfectly.

“We have regular dialogue in Canada with various groups who are looking to do deals in uranium specifically,” says Wade.

“We’ve got some fantastic uranium assets, which are already attracting attention from potential partners.”

What any such deal might look like, isn’t yet clear.

But what Wade will say is that there’s lots of news coming.

Watch this space.